Making Changes to Employment Terms and Conditions

What should businesses consider when contractual terms do not meet business needs or cost savings are required?

21 Nov 2019

Every business can restructure as required. It is key however that appropriate consultation takes place with all affected employees. Consideration should be given to both those whose terms may differ and also with those whose roles and responsibilities may be affected as a result.

Asda have been in the press recently further to their consultation with their employees to change their terms and conditions. Reportedly, thousands of employees were told to sign the new contract before 2nd November or leave the business.

The GMB union says up to 12,000 workers have faced a choice between signing the new contracts - which increase wages to £9 an hour but scrap many other perks - or being dismissed. Asda told the BBC: "This contract is an investment of more than £80m and increases real pay for over 100,000 colleagues."

What should businesses consider when contractual terms do not meet business needs or cost savings are required?

A clear business rationale is required in advance of any action. This helps form a foundation for the change and supports those managing the change and outline why the change is needed, what needs to be achieved by the change, what alternatives have been considered and who will be affected. Consultation should be a two-way process where ideas are shared and worked on together.

The employer should explain the rationale and invite employees to talk about their concerns and suggest ideas for alternatives, listen to employees’ concerns and consider their ideas and do everything they can to resolve any employee concerns.

The employee should consider the proposed change and reason for the change, share their views, concerns and any ideas for alternatives with the employer, continue to talk to the employer about any concerns and make sure they have tried all options to reach an agreement.

Where Trade Unions are recognised, they should be consulted.

Change is often difficult and will affect employees differently. It is essential to consider employee morale during consultation and be mindful of how this might impact productivity and the brand. Asda’s case has been widely reported in the press and there have been calls on social media for the supermarket to be boycotted.

6 simple ways to manage employee morale during company changes are:

Keep communication open - Transparency is always a best practice, but it is especially beneficial during major changes in the workplace. Gossip can get creative and out of hand. The staff may start to fill in the blanks with negative falsehoods and spread rumours. To combat this, host open discussions to invite questions. Present upcoming changes and show employees how they’re involved in the company’s changes. These discussions should be regularly scheduled. And they should be designed as an open dialogue between all levels of leadership and employees.

Remind employees they’re valued – Don’t overlook the power of recognition. Don’t leave employees guessing. If they don’t know where they stand just as a lot of changes start to occur, they might assume worst-case scenarios.

Emphasise the importance of fun - Major changes can remind employees that a lot of aspects in their career are out of their control so all the more reason why, when an organisation is forced to change, leadership should focus on showing its dedication to the employees and create a team spirit.

Work on team-building - Tensions can rise during times of change, so it’s important to keep employees close with one other and with management. Leadership should invest in ways to develop unity among employees.

Create more positive workplace energy – what will be the benefits of the change? The design of the workplace has an impact on employee morale as well. Employees need to feel comfortable where they work, especially when there’s a lot of stress about upcoming big changes.

Focus on goals - align business goals with employee goals. Your business wants to make more money and so do your employees. Relay goals that are easy to understand and embrace so employees will work harder to help you achieve them. Set short-term goals so that employees see and enjoy small successes in the midst of changes. Show employees data that explains how their contributions make a difference in achieving business goals.

It may be that change has to be enforced without employee agreement, but this can be supported as long as you follow a comprehensive and fair consultation process. Change is often avoided because of the perceived inconvenience however it may be essential for business growth or even survival.